Discuss about the Literature Review for Cultures and Business.
The objective of this paper is to discuss the literature review for the article, ‘Managing changes in globalizing business: How to manage cross-cultural business partners’. In this article, authors have discussed the cultural impact on the business. It has been observed that various large organizations in the western countries like USA have been using the lean manufacturing system developed by Toyota. However, the establishment of this system depends on various internal and external factors of the organization that are determined by the cultural fit (Graen & Hui, 1996). This article was published in the year 1996 but the learning of this article still holds true. In fact, with the forces of globalization and Internet, organizations have started to focus on international markets. Therefore, it is important that the organizations must have a clear understanding of the foreign markets and culture (Geringer, 1991). It would enable the organizations to conduct business swiftly in the international markets. This article was published in the journal or organizational change management and in this article, authors argued that the organizations must analyze the external factors are the cultural factors before entering any new market. As a part of initial hypothesis, authors mentioned that a necessary but not sufficient condition for a successful transplant across vastly different cultures, such as from east to west, is the development over time of a third culture which is compatible with both of the original cultures, but transcends them to produce a unique venture culture(Graen & Hui, 1996).
Hunkeler, (2000) suggest that the cultural factors are the major driving factors that could define the critical success factors for organizations to operate and to succeed in the new and emerging markets. Authors highlighted that the cultural fit for organization would mean the integration of the financial, environmental and technological criterion to meet societal demands. The consequences of the decisions made will affect the micro and macro-economic environments. The use of standard measurements used by many organizations is often rolled up in the costs of the product. Henkeler, (2000) suggest what customers are willing to pay is a financial risk that organizations must take in order for long term survival in the new markets.
In the article, authors mentioned that growth is a critical aspect of the organization when they enter the new markets. Looking at growth in the perspective of providing the needs of the organization, focusing on the roles management place in positively influencing the organization in efforts to provide a stable environment, and growing in a manner that considers placing the organization in a place where they can compete and adapt is an excellent perspective and certainly aids in the organization growing with efficiency. Another aspect of growth would be ensuring that the management of people is efficient in the organization in the new environment. This is know to be the stage in where the organization begins to groom its self for stability and success by placing the right people in the right places to establish and enforce organizational goals and initiatives that have been identified as critical factors of the organizations mission and vision (Phelps, et al., 2007). With this in place the organization will be prepared to grown in all aspects that matter the most.
The organization of people is also a very important aspect of growth in the multicultural environment. If a company’s resources are mismanaged or inappropriately managed, a company will suffer from to crisis (Porter & Steers, 1974). Such crises have plagued large companies such as the example given of Dell where management has become over bureaucratized and departments find themselves being suffocated by red tape. Therefore, large companies have looked to become a hybrid of a big company/ small company hybrid such as Johnston and Johnston who is actually a group of 250 separate companies operating in 57 countries (Daft, 2015). Such other large companies as Lowes have allowed each individual store manager the autonomy to operate as a small, hometown shop (Daft, 2015). Vanguard, another company, requires all managers even their CEO to spend time each month manning the phones and directly talking to customers (Daft, 2015). This intervention helps to eliminate the problem of isolate top managers from not knowing what goes in the trenches.
Authors mentioned that monitoring growth is an important aspect of organizational development in multicultural environment and is necessary to understand how effective the organization is. Throughout the organizational life cycle stages leaders must be able to recognize when it is necessary to revitalize the organization and its processes. During the initial stages of entrepreneurship creativity and innovation are at the forefront of the operation because the organization needs to make a path for success. Ironically, older organizations in the formalization stage are also marked by the need to revitalize and spark innovation in order to prevent decline (Hamel & Prahalad, 1989). At each stage it is necessary for the organization to assume an entrepreneurial culture to continue to survive and thrive. Entrepreneurial culture is noted as a key outcome and indicator of innovation in an organization. An important extension of monitoring is acting upon what is discovered through monitoring. It is imperative for managers to recognize the signs of crisis in each stage and take action to regain some semblance of control over the outcomes of growth.
Understanding the frame of reference of the followers or to whoever the leaders works with is very critical not only in cross-cultural but within different departments of the same organization. In fact, there could be cases when the same organization has different cultures across its departments or the organization could have different cultures across different geographies. For example, the organizational culture of Google Inc. may not be same in the developed countries like Australia and the developing countries like India. Today, the marketing culture is driven by rapport-building practices that attach high values to relationships and these relationships vary across different cultures (Leong & Tan, 1993).
The article is an interesting article to read. In the article, authors mentioned that, change is constant and continuous improvement becomes a requisite to meet the demands of stakeholders and maintain a level of profitability. Many initiatives such as the International standards Organization (ISO), Lean, Quality and environmental initiatives will have an effect on the profitability of an organization (Graen & Wakabayashi, 1991). Technology is changing rapidly, and globalization is increasing. This results in rapid changes in most organizations.
I can say that I would agree with the authors’ point of view that organizations must have a clear understanding of the foreign markets and culture. I would also agree that the analysis and the study of the foreign culture and international market would enable the organizations to take effective business decisions. The authors’ argument holds true, as the organizations method of conducting business would be different in different markets. The approach that Apple takes to sell its I-Phone in American market may not work in the Indian market (Hui & Lin, 1996). It is important that this approach should be contextualized with the local markets and external factors. Therefore, the study and analysis of the culture would be an added advantage for the organizations. The system like Lean manufacturing works best for Toyota in Japan, as the management was able to get the support from hard working staff in Japan. The success of these systems in the foreign market like USA would also need the support from employees and other stakeholders.
The authors’ argument holds true as the study of the international culture and environment would help the decision makers to negotiate better and negotiation is often required when the companies enter into new regions. Therefore, it can be said that the deep understanding of the culture would enable the businesses to conduct business effectively in the foreign and international markets. In my opinion and from my experiences, continual reflections are a necessary element that can provide the lessons learned of the things that worked well and what hasn’t worked as expected. From the failures, organizations can change even in closed systems. As we know organizational dynamics are not static and continually evolve. Organizations must adapt to the external environments to stay one step ahead of its competition to gain a competitive advantage in the marketplace.
Daft, R. L. (2015). Organization theory and design (12th ed.) Mason, OH: South-Western, Cengage Learning.
Graen, G.B. and Wakabayashi, M., 1991. Cross-cultural human resource development for transfer of management technology. International Business and the Management of Change, pp.147-69.
Graen, G. and Hui, C., 1996. Managing changes in globalizing business: how to manage cross-cultural business partners. Journal of Organizational Change Management, 9(3), pp.62-72.
Geringer, J.M., 1991. Strategic determinants of partner selection criteria in international joint ventures. Journal of international business studies, 22(1), pp.41-62.
Hamel, G., Doz, Y. and Prahalad, C., 1989. Collaborate with your competitors. Harvard business review, 67(1), pp.133-139.
Hui, C. and Lin, Z., 1996, January. Regulating collective actions: A case of two cultural systems. In Research Workshop on Global Organizations at Hong Kong University of Science & Technology.
Hunkeler, D. (2000). Life Cycle Profit Optimization of a Business Opportunity. The International Journal of Life Cycle Assessment, 5(1), 59-62.
Leong, S.M. and Tan, C.T., 1993. Managing across borders: An empirical test of the Bartlett and Ghoshal  organizational typology. Journal of International Business Studies, 24(3), pp.449-464.
Phelps, R., Adams, R., & Bessant, J. (2007). Life cycles of growing organizations: A review with implications for knowledge and learning. International Journal Of Management Reviews, 9(1), 1-30. doi:10.1111/j.1468-2370.2007.00200.x
Porter, L.W., Steers, R.M., Mowday, R.T. and Boulian, P.V., 1974. Organizational commitment, job satisfaction, and turnover among psychiatric technicians. Journal of applied psychology, 59(5), p.603.